BMI View: China's weight in the global agricultural sector is swelling, as the country has a growing impact on international production balances and prices. China will maintain a strong appetite for key commodities for the foreseeable future and we see particular potential for production growth in sugar, dairy and meat products. High demand growth, strong government support and potential for investment and consolidation in these industries will help them outperform in the coming years. However, the agribusiness sector is experiencing challenging times, with GDP growth slowing down, consumers' trust in food safety dwindling, food ingredients prices rising, labour costs soaring and bank loan requirements for small sized enterprises tightening.

This is best seen in the slowdown in meat and milk powder consumption in 2015 amidst low supply, elevated prices and the ongoing crackdown on red tape and government receptions, which also supported demand in recent years.

Agricultural production in China has recorded exceptional growth over recent years, driven by an expansion in area cultivated and strong growth in productivity. However, output growth is slowing down in some of the largest producers, due to pollution and land constraints. The government has acknowledged the challenge and is more reformist than ever. In 2015, China will continue to amend its stockpiling policy and will accelerate its reforms to partially liberalise land and prices, which will enable the country to maintain an elevated level of food self-sufficiency.